Obesity remains a serious health problem and it is no secret that many people want to lose weight. Behavioral economists typically argue that “nudges” help individuals with various decisionmaking flaws to live longer, healthier, and better lives. In an article in the new issue of Regulation, Michael L. Marlow discusses how nudging by government differs from nudging by markets, and explains why market nudging is the more promising avenue for helping citizens to lose weight.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

Search form

A Consumerist, Not “All of the Above” Energy Policy

President Obama just can’t seem to make up his mind on Keystone XL. Earlier this year, he denied federal approval for the project, which would have unleashed construction of a 2,600-mile pipeline to transport crude oil from Canadian shales to refineries in the American south.

Yet just a few days ago, at a campaign stop in Cushing, Oklahoma, the Energy-Impresario-in-Chief said that he actually did support the pipeline — well, part of it at least. He announced a plan to fast-track construction of Keystone’s southern leg, a 484-mile track running from Cushing to the Gulf Coast, representing about 29 percent of the overall route.

A White House that high-handedly rejects a major energy project one day, then boldly demands fast-track approval for that same project the next day, hasn’t exactly established a coherent energy policy. What is that about half-slave, half-free?

Obama’s limited Keystone approval is part of what the President calls an “all of the above” energy strategy. The idea is that the administration will support any project that promises to ramp up overall supply, bring down prices, and reduce national dependence on foreign energy sources — including the oil and gas sector Democrats have been so hostile too in the past.

Sounds great. The problem is, the actual content of Obama’s “all of the above” approach is heavily biased toward “green tech” and does not even include coal, which accounts for more domestic electricity generation than any other energy source.

And in the grand scheme of things, approval for Keystone’s southern leg — an estimated $2.3 billion privately funded project — is relatively small potatoes compared to the tens of billions of dollars in federal largesse flowing to miniscule wind and solar.

A smarter approach would be to avoid playing favorites. No one in the energy market should be given preferential treatment. Unless the government has good reason to deny a new project, it should be approved and allowed to compete on the open market. Remove government to let customers and private investors decide what’s worth pursuing in energy subject, of course, to the hundreds of pages of existing regulation and protocol.

Here are five major steps this administration can take right now to move energy policy from that sham of “all of the above” to one of “consumer first.”

First, avoid needless restrictions on hydraulic fracturing — colloquially known as “fracking.” This practice shows profound promise for the development of this country’s massive reserves of oil and natural gas without compromising the environment. Recent back peddling by EPA on adverse findings and lawsuits are a good start in this regard.

Lifting or just foregoing unnecessary restrictions would provide an immediate boost to our domestic energy supply. There’s an estimated 273 trillion cubic feet of recoverable natural gas in North America and 1.7 trillion barrels of recoverable oil. That’s enough to power this country for 250 years.[1]

Second, federal regulators need to throttle back hasty regulation on offshore energy exploration imposed after the 2010 Deepwater Horizon disaster. When the Interior Department lifted its drilling moratorium in the Gulf of Mexico, new mandates and go-slow permitting resulted in half of the pre-spill activity (15 versus 30 projects).

Third, the federal government must streamline permit processes. Even when energy companies are allowed to initiate new projects, the process of getting final government approval can be so long and costly that many ending up quitting out of frustration.

This means we’re losing important new projects simply because of bureaucratic overreach. Today, just six percent of the country’s onshore energy deposits are actually being developed. And just 2.2 percent of its offshore reserves are.[2] That needs to change. Permits should quickly be issued to all applicants that can prove their operations have been competent, responsible and safe.

Fourth, the President himself needs to clean house. A number of high-level administration officials are hopelessly biased against traditional energy exploration.

Energy secretary Steven Chu once actually said, “We have to figure out how to boost the price of gasoline to the levels in Europe.”[3] And Obama’s scientific advisor John Holdren: “More energy for its own sake (or for profit’s sake) can no longer serve as the goal of national energy policy.” He ominously added: [M]uch tighter control over the energy industry by government is the minimum prescription for steering away from this outmoded view.”

Chu, Holdren, and other federal officials who are anti oil, gas, and coal have no place in an administration that is allegedly concerned about pocketbook energy issues.

Finally, the White House should back off its misguided plans to levy new punitive taxes on energy development. The President’s proposed budget for 2013 raises taxes on oil and gas by $27 billion over the next decade. A better approach would be to simplify the tax code to eliminate preferential treatment for any and all competing energies to let the market sort out winners and losers.

“All of the above” is a smokescreen for good energy subsidizing bad. Government officials don’t — and can’t — know the “answer” to this country’s energy challenges. They should stop trying and let consumers decide in a free and open marketplace.